What 'The New Yorker' didn't ask Fred Wilpon
It's hard to imagine, but the undiplomatic statements by Fred Wilpon about Jose Reyes, David Wright, Carlos Beltran and the New York Mets are probably the least important things we learned from Wilpon’s botched effort to generate some positive P.R. by speaking at length to Jeffrey Toobin of The New Yorker.
After all, the statements aren’t even accurate. Wilpon says he believes that Reyes won’t get “Carl Crawford money”—seven years, $142 million—but Reyes plays a more premium position, is younger, and is every bit Crawford’s equal offensively. So he probably will, but no matter—the Mets aren’t in a financial position to give it to him.
Wilpon describes David Wright as a “very good player. Not a superstar.”
Wright has had a difficult 2011; he played with a stress-fracture in his back. But he still has the seventh-best combined on-base and slugging percentage of all time among third basemen through age 28. There are only six guys ahead of him—five in the Hall of Fame, and a sure future inductee in Chipper Jones. No matter—by the time Wright’s contract is up, the Mets should be under new ownership.
Wilpon also described Carlos Beltran as being 65-70 percent of the player he was. Incredibly, that may be true, but only because the star right fielder was once not only a great hitter, but a defensive master in center field.
“We had some schmuck in New York who paid him based on that one series,” Wilpon said of himself, in the New Yorker piece. It's strange that Wilpon saves the rare criticism of himself for something he did right—Beltran’s best days are now behind him, wasted on Wilpon’s Mets.
But we knew all this already. Wilpon, for all of his protestations that he was a hands-off owner, was described by Omar Minaya as happiest when “we were arguing over a player and Fred would say, ‘Omar, you’re full of shit.’” Minaya, remember, is the man the Mets pretended had “full autonomy.”
Wilpon's decision to talk to The New Yorker achieved its purpose, by yielding a piece that shows him as an approachable and unpretentious guy. Or it would have, if it didn't also show his willingness to say uncharitable and inaccurate things about the value of his own players.
The more frustrating aspect of the article, which is worth reading, is what it doesn’t tell us: how dire Wilpon’s financial situation is, when the Mets might see the daylight of new ownership, and how this apparently conscientious man (the article quotes everyone from Sandy Koufax to … Bernie Madoff attesting to Wilpon’s rectitude) is OK with the prospect of making the Mets suffer along with him as he maneuvers to avoid further financial fallout from his Madoff investments.
It’s understandable that it’s all about Wilpon’s side of the story. Wilpon was open (to a fault) with Toobin, while Irving Picard, the Madoff-victim trustee whose pursuit of Wilpon’s money will most likely force a sale of the Mets, declined to talk. That all makes sense.
But still, with unprecedented access to Fred Wilpon, it’s surprising that Toobin chooses to summarize Picard’s 363-page complaint and 135-page response to Wilpon’s response this way:
“Picard’s complaint raised as many questions as it answered. Most important, if Wilpon and his partners had so many reasons to suspect that Madoff was a fraud, why did they leave so much money under his supervision? Their huge commitment of money to Madoff’s care seems to suggest that they thought Madoff was legitimate, not that he was running a Ponzi scheme.”
Surely Toobin knows that Picard isn’t looking to prove that Wilpon and his brother-in-law Saul Katz knew Bernie Madoff was running a Ponzi scheme. He is looking to prove they “knew or should have known.”
So Wilpon and his friends are allowed to argue here that they didn't know, as if that settles it. But it only serves to strengthen Picard’s case if they failed in their fiduciary responsibilities to themselves and others when in fact they “should have known.”
Toobin also attacks the value of Peter Stamos as an element of Picard's case against the Wilpons. Stamos is the man who created an investment company with Wilpon and Katz, called Sterling Stamos, to diversify Wilpon and Katz's holdings from Bernie Madoff years before the scandal broke. His warnings about Madoff form the basis for Picard’s contention that the Wilpons were amply warned:
“There is something troubling, however, about the way the Picard complaint portrays Stamos as the Cassandra of the Madoff scandal—the person whose persistent warnings were ignored by Wilpon and Katz. Wilpon’s lawyers at Davis Polk discovered that Stamos had given a deposition during Picard’s investigation, and the transcript gives a very different picture of Stamos’s state of mind from that portrayed in Picard’s complaint.”
But Stamos and his colleagues aren’t just “portrayed” in Picard’s complaint. According to multiple emails from Sterling Stamos employees, the company’s chief investment strategist, Ashok Chachra, “always said it was a scam” and Chachra himself wrote in a December 13, 2008 email:
“In fact, we turned down the Madoff Funds more then [sic] six years ago and told many of our investors including the Wilpon and Katz families our concerns. Notwithstanding our concerns, the Wilpon and Katz families continued to invest with Madoff Securities.”
And it wasn’t a Cassandra, it was a Greek chorus. Arthur Friedman, a Sterling partner, indicated that he couldn’t replicate Madoff’s returns as early as the late 1980s. Merrill Lynch wouldn’t invest with Madoff, and told the Sterling partners so. Ivy Asset Management, another prominent investment partner, warned Sterling partners about Madoff. Multiple news articles raised questions along the very same lines, and were circulated among the Sterling partners.
Even the recent media blowup about Wilpon and Katz seeking information about getting fraud insurance on their Madoff investment came as a result of a suggestion-warning from American Securities, a business partner of Sterling going back to 1990. And Wilpon and Katz declined due to the cost involved—in essence, that they had too much invested in Madoff to afford to insure their Madoff holdings.
Sounds like people who didn’t know Madoff was a scam, right? But also, once again, it shows Wilpon and Katz ignoring advice from prominent investors that they clearly should have heeded. Fun fact: that Madoff insurance would have cost Fred Wilpon $1.5 million, with a $500,000 deductible, on $500 million of Madoff holdings. Put another way, Wilpon could have insured roughly his entire Madoff portfolio for the amount he’s paying Gary Matthews Jr. through the end of this year for 65 awful plate appearances last year.
It's not made clear in the article why the reader ought to accept Wilpon’s estimate of Madoff-related gains ($160 million), without also being told that Irving Picard’s estimate of the number is $300 million, and that Picard’s standard has already been litigated and accepted by a bankruptcy judge.
Nor is it clear why Wilpon’s assertion that the Mets are worth over a billion dollars (Forbes has them at $747 million with nearly that much in debt) isn't more agressively vetted in the piece. Which leads to another question: How can he possibly expect to hold onto the team if he’s selling 49 percent now just to cover 2011 losses, debt payments on Citi Field and a loan due back to Major League Baseball by the end of the season?
There are also questions that didn’t exist before the piece, and which do now, like why Wilpon would choose to devalue the very assets his team needs to extract maximum value from—particularly in light of the throwaway line that the team estimates 200,000 fans will generate $25 million in revenue.
In those terms, if Jose Reyes is worth an extra 200,000 fans a season—and he’s one of the compelling reasons, if not the most compelling reason, to watch the New York Mets—giving him “Carl Crawford money” would allow the Mets to break even. Or here’s a better idea: since Wilpon probably cost himself at least that much in attendance this season with his comments, he could have accomplished the same thing by keeping his mouth shut and signing Jose Reyes for “Carl Crawford money.”
Instead, we hear the owner who can no longer afford Reyes, and whose team’s bungled treatment of his injuries created the very long-term absences Wilpon now cites as reason to jettison Reyes and other successful Mets. Wilpon failed, but the very players who masked that failure for a time get to take the fall.
This article will be remembered for Wilpon’s description of the very asset he is desperately trying to sell to raise capital: “Shitty team.” At least he’s willing to talk honestly about his sins as a baseball owner, if not as an investor.